Notice to investors in the MLC Investment Trusts (the Trusts )

Transcription

1 Notice to investors in the MLC Investment Trusts (the Trusts ) We propose to make some changes to the constitutions which govern your investment in the Trusts. The changes to the constitutions are required to facilitate their operation under a new income tax regime, called the Attribution Managed Investment Trust ( AMIT ) regime. The changes won t take effect unless we form the view that it would be in the best interests of the unit holders as a whole to elect into the AMIT regime. What is the new AMIT regime? It is a new tax regime applying to managed investment schemes, enacted on 5 May 2016 under the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 (Cth). The Federal Government introduced the AMIT regime in response to concerns raised by the managed funds industry that the current tax system is too complex and uncertain. We expect the AMIT regime will improve the way managed investment trusts are taxed by increasing certainty, allowing greater flexibility and reducing compliance costs. What unit holders need to do You don t need to take any action, however, if required, further details are set out below _2

2 12 May 2017 PROPOSED MODIFICATIONS TO THE CONSTITUTIONS New Attribution Managed Investment Trust regime This document is the website disclosure for the purposes of Section 601GCA (3) and (4) of the Corporations Act 2001 (Cth) as inserted by ASIC Corporations (Attribution Managed Investment Trusts) Instrument 2016/489. MLC Investments Limited (ACN ) ( MLCI ) is the responsible entity of the registered trusts listed in the table below (each a Trust and together the Trusts ). This notice informs unit holders in the Trusts that MLCI proposes to modify the Trusts constitutions ( Constitutions ) to facilitate their operation under the new Attribution Managed Investment Trust regime ( AMIT regime ). Trust name Registered trust name ARSN MLC Wholesale Horizon 1 Bond Portfolio Horizon 1 Bond Portfolio MLC Wholesale Horizon 2 Income Portfolio Horizon 2 Income Portfolio MLC Wholesale Horizon 3 Conservative Growth Portfolio Horizon 3 Conservative Growth Portfolio MLC Wholesale Horizon 4 Balanced Portfolio Horizon 4 Balanced Portfolio MLC Wholesale Horizon 5 Growth Portfolio Horizon 5 Growth Portfolio MLC Wholesale Horizon 6 Share Portfolio Horizon 6 Share Portfolio MLC Wholesale Horizon 7 Accelerated Growth Portfolio Horizon 7 Accelerated Growth Portfolio MLC Wholesale Australian Share Index Fund MLC Wholesale Australian Share Index Fund MLC Wholesale Australian Share Fund MLC Wholesale Australian Share Fund MLC Wholesale Global Share Fund Wholesale Global Share Fund MLC Wholesale Global Property Fund MLC Global Property Fund MLC Wholesale Hedged Global Share Fund MLC Hedged Global Share Fund MLC Wholesale IncomeBuilder Wholesale Income Builder MLC Wholesale Property Securities Fund Wholesale Property Securities Fund MLC Wholesale Diversified Debt Fund MLC Wholesale Diversified Debt Fund MLC Platinum Global Fund* MLC Investment Trust MLC Platinum Global Fund* * Closed to new investors The proposed modifications are summarised in Table 1. The AMIT regime The Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act (Cth) 2016, together with additional related legislation, is the basis for the new AMIT regime. In order for the AMIT regime to apply, a trust must meet eligibility criteria and the responsible entity must elect that the regime will apply for the trust with effect from a particular financial year. However, even if the responsible entity makes that election, the AMIT regime may cease to apply at any time if the trust fails to satisfy all of the criteria. MLCI currently intends to elect for the AMIT regime to apply to the Trusts for the 2017/2018 financial year. It has not yet made a final decision on this. MLCI will make this election only if it has formed the view that this would be in the best interests of the unit holders as a whole. Unit holders will be notified. Key difference between the current tax regime and the AMIT regime The current tax regime is Division 6 of the Income Tax Assessment Act (Cth) Unit holders of a trust are taxed according to each unit holder s entitlement to the income of the trust. By contrast, under the new AMIT regime, unit holders are taxed on the taxable income that is attributed to unit holders by the responsible entity. The AMIT regime requires the responsible entity to undertake this attribution on a fair and reasonable basis. Factors MLCI is considering Some of the factors MLCI is considering in deciding whether to elect for the AMIT regime to apply to the Trusts are that the regime will: _2 2

3 provide greater flexibility when attributing taxable income between unit holders, as the income must be attributed on a fair and reasonable basis. This is an alternative to the current tax position where unit holders of a trust are taxed proportionately according to their present entitlement ; provide greater certainty of the tax status of the Trust and clarify eligibility for certain tax concessions, including providing a deemed fixed trust status for tax purposes; offer flexibility for reconciling under-estimations or over-estimations of net income of a Trust. This includes making adjustments to unit holder entitlements to trust income in the year the under- or over-estimate is discovered. The current requirement is to amend previously lodged unit holder tax returns; and provide appropriate cost base adjustments, where distributions are greater or less than the amount on which the unit holder is assessed for tax purposes. This minimises the potential for double taxation. Proposed modifications to the Constitutions MLCI is proposing to modify the Constitutions to enable the Trusts to operate under the AMIT regime by 1 July The proposed modifications are summarised in Table 1. Importantly, while the modifications facilitate the operation of the Trusts under the AMIT regime, they will not take effect unless MLCI makes an election for the AMIT regime to apply. What unit holders need to do You don t need to take any action but unit holders will be advised when the modifications have been made. More information Please contact between 9am and 5pm (AEST) Monday to Friday _2 3

4 Table 1: Proposed modifications to the Constitutions Modification Distributable income, distribution and accumulation, attribution Description of the modification The existing provisions for the determination of distributable income are retained and will apply for financial years to which the AMIT regime does not apply. New provisions: provide for distributable income for financial years to which the AMIT regime applies to include the trust components that have an assessable income character, together with additional amounts MLCI considers appropriate (eg amounts relating to the discount capital gains concession); give MLCI an express power to defer distribution of the distributable income for financial years to which the AMIT regime applies to a later distribution period in the same financial year, or accumulate and not distribute the distributable income at all; provide the basis for attribution of components of taxable income to unit holders. It addresses specific requirements of the AMIT regime, such as a fair and reasonable basis for attributions and that attributions must not be based on the tax characteristics of the unit holder; provide for the basis for attribution of the components of taxable income to unit holders to reflect any election which MLCI may make for separate classes of units in the Trust to be treated as separate tax entities under the AMIT regime; and provide that, in exceptional circumstances, MLCI may determine that on redemption of units, the unit holder will be attributed with taxable income which has arisen for the Trust since the commencement of the current financial year and has not already been distributed. MLCI may do so only where it has reasonably determined that the amount attributed is connected to the redemption price of the units redeemed. Rights and powers New provisions: provide MLCI with general powers, which include electing in to the AMIT regime and powers otherwise necessary or desirable to operate the Trust under the AMIT regime; provide MLCI with specific powers which are expected to be necessary for the Trust to operate under the AMIT regime, including determining taxable income components, making attributions to unit holders and issuing unit holder statements for that purpose; seek to exclude MLCI from liability in respect of, or as a consequence of, the exercise of powers provided to it for the purposes of the AMIT regime, but this will generally only be available where MLCI has properly performed its duties; seek to provide for MLCI to require unit holders and former unit holders to give certain indemnities for tax and related costs and expenses incurred by MLCI, but only to the extent that such tax and related costs and expenses were incurred by the responsible entity in the proper performance of its duties; and seek to impose certain procedural requirements on unit holders and former unit holders if they are seeking to exercise their objection rights under the AMIT regime, and provide MLCI with certain powers with respect to how such objections are dealt with. Incidental changes Other changes considered by MLCI as being necessary or incidental to the Trust being able to be operated as an AMIT, for example, to include specific definitions referable to the AMIT regime _2

5 Important information This information is provided by MLC Investments Limited (ABN , AFSL ), a member of the National Australia Bank Limited (ABN , AFSL ) (NAB) group of companies (NAB Group), Miller Street, North Sydney NAB does not guarantee or otherwise accept any liability in respect of any financial product referred to in this communication. This information is directed to and prepared for Australian and NZ residents (as applicable) only. This information may constitute general advice. It has been prepared without taking account of an investor s objectives, financial situation or needs and because of that an investor should, before acting on the advice, consider the appropriateness of the advice having regard to their personal objectives, financial situation and needs. You should obtain a Product Disclosure Statement (PDS) relating to the financial products mentioned in this communication issued by MLC Investments Limited, and consider it before making any decision about whether to acquire or continue to hold these products. A copy of the PDS is available upon request by phoning NAB Asset Management Client Services on or ing info@nabam.com.au. Any opinions expressed in this communication constitute our judgement at the time of issue and are subject to change _2 5